A local news report last night from Denver’s 9News reveals a scheme setup at Apple stores in Colorado that saw iPhone traffickers convincing people in need of quick cash to sign contracts and hand-over subsidized iPhones. The traffickers would turn around and sell the unlocked iPhones for full retail, off-contract prices, but in exchange their unknowing accomplice is stuck with the monthly payments or faces ruined credit. The report also claims that Apple store employees appeared to be in on the scheme. 

The men will drive victims to Apple stores and convince them to sign numerous contracts for numerous iPhones. Victims will then be paid $100 or more in exchange for several iPhones.

“I’m in the hole about $6,000,” Phoenix said. She claimed she was told by the schemers she could cancel her contracts within three days. “They’re targeting anybody that looks like they would be vulnerable.”

The scheme has since been shut down by mall authorities, at least at the Cherry Creek Apple Store, but the report claims that Apple employees might have been involved. “9Wants to Know observed an Apple store employee collect Sauer’s information for several contracts…The same Apple employee was seen giving Sauer’s new iPhones directly to the schemers.” The report also notes many of the participants were surprised they were able to purchase, in some cases, several iPhones on contract with bad credit.

Most of the carriers wouldn’t comment on the situation for the report and either would Apple, but a representative from Sprint told 9News that it’s witnessed increased “credit muling” problems since it introduced the iPhone and filed 40 federal lawsuits across the country to crack down on similar schemes.

Police recently arrested people behind a similar scheme at the Park Meadows Apple store in which a mentally disabled man was convinced to sign iPhone contracts.

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58 Responses to “iPhone traffickers convincing poor/homeless to sign contracts at Apple store (Video)”

  1. Joel Henson says:

    stupid is as stupid does

    • Great reporting. Shame on Apple and that Apple store.

      • thealikhan says:

        The Apple stores in the article are so busy all the time, it sounds a little exaggerated that they know that this is going on. Not to mention, what are they supposed to do? Stop selling phones to people who look homeless? That’ll go over well.

      • I wouldn’t say that it was the Apple corporation that did this, rather franchise stores who were likely receiving kick backs from Apple inc, for sale contracts.

      • I don’t think blame falls on apple. Unfortunately lots of people will turn to make a buck. If anything shame on these low lives who scam on people who are already in unfortunate circumstances. They would probably scam your mother or grandmother too if they could.

      • standardpull says:

        I am quite confident that Apple would immediately fire any employee doing this AND their manager. This is illegal, it hurts Apple, and it hurts Apple’s partners. And it’s bad press to boot. Shame on these losers taking advantage of these people.

        All that said, it is the carrier’s problem. They’re failing to perform a proper credit check. Someone with no income or credit history is a very bad bet.

      • Tallest Skil says:

        Except it has nothing to do with Apple. Take your FUD and shove it.

      • Apple does not have franchise stores and Apple does not get any money from selling contract phones because Apple is not a service provider. The money for the phones and contracts go to the carrier.

      • So if the Apple Stores are not Franchise stores, that means they are not independently owned by a Franchisee. Am I right? It seems to me that the failure is with the carrier, not doing proper credit checks. Someone with no income, and no or poor credit, is a bad bet. The employees at the store are probably getting commissions, which means they have an incentive to allow this scam.

    • Aaron, no the Apple store employees do not make any commission on anything and that is very public knowledge. They have no control over the credit check, it is an automated system you put the information in and it tells you whether or not the person can get the service with a deposit or without and each carrier has their own rules and guidelines for their credit check pple has nothing to say about it. So they have no idea whether the person has no income or bad credit, you can maybe assume someone has bad credit if they come back with a high deposit but in some cases the deposit might be $200 and the people may pay that just to get the phones. And finally an APple employee cannot turn down someone from applying for service, then you would see claims of Apple discriminating against people. It is up to the people being scammed to be more educated and not go for this, we can’t babysit everyone in this country sometimes people need to take responsibility for their own actions.

  2. Ok, so first, I would like to say that this guy is an idiot. This has been going on for years not something that has happened recently. I worked an an Apple store in Virginia for almost 2 years and believe me they do know its happening. They just have their hands tied because there is no law stating that it’s illegal. We did everything we could when selling to these people to help them understand what will happen to their credit and to try to keep them from buying the phones. Some of them actually did not buy them. Plus we limited purchases to 2 phones and that helped as well. This news reporter needs to do more research and understand what he’s talking about before mouthing off like a moron! Ugh!

    • James.L says:

      Scamming is not illegal? Did you watch the news? It says he lied to these people, he told them that they can “cancel” the contract at a later time, which is completely false. If this kind of action isn’t illegal, I don’t know what it is. What more research do you want the reporter to do?

      • Buyer beware, that is how capitalism works. You can get a loan for a car, house, or other and the bank doesn’t have to tell you the truth, in fact I have been lied to in the past. I pissed salima off when I read the contract before signing it, asked hard questions and made their rep look like a idiot.

      • There is nothing that they can do about it, and the truth is they can cancel the contract within 14 days but they will still be on the hook for the subsidized price they paid for the phone, so technically it is true, and the guy does need to do more research cause I worked at an Apple store too and there is nothing we could do to stop it because the people they used, even though we tried to explain to them what would happen did not care because they were only thinking about getting that fast money, and it is not illegal if the person goes a long with it willingly, they need to know more about what they are getting themselves into before agreeing to it.

  3. Finally!. The poor and abused make the phones, and now the poor and abused can buy them. Sign up the entire Foxconn factory. Let Apple and the Telecoms take the hit. They created this environment with their over-priced and duplicitous systems.

    • Victor O says:

      You are aware that the crime the guy in the video doesn’t cost Apple anything? The people who are buying the phones and selling it to the scammer are the ones who are at risk. Apple has already received the money. That’s the point of this guy’s game: he has someone buy the phone from the Apple store then he buys it from them while the original buyer remains under the contract.

      Did you even bother to read or watch the video, or did you just want to make a point about smartphones somehow being overpriced?

    • scumbolt2014 says:

      My 4s is working great after over 2 years of use. Even better than the day I got it with iOS 7 by the way. When I figure in how much I use it everyday and how reliable it is then the exoense is negligible.

    • The companies won’t take the hit. They will hold the debt against those who signed the contracts, because businesses are heartless. When companies take the hit, it is a PR stunt, to make themselves look good.

      The pay models which reward signatures and contracts signed need to go away, commissions promote scams.

      • Yes, they will take a hit, when it becomes obvious that the bills will Never get paid. That is why poor are such effective targets, they don’t care about the debt because they know they can’t possibly pay it. They won’t be thrown in debtor’s prison, that died out a long time ago.

    • Holy crap, the amount of irrelevance in this comment thread is astronomical. Its like 3 different conversations. Poor and abused? Apple and the Telecoms? “They created the environment”? What in the crap are you ? Then the guy who loves iOS 7 so much he doesn’t know where to put his comment… Just wow.

      Back on topic, maybe this is the new way of circumventing Activation Lock, since stealing an iPhone and activating is a bit harder now.

  4. myke2241 says:

    That is some messed up crap! I only wish bad things to the people organizing such a sleazy thing.

  5. SR says:

    WOW! I know it’s tough times around the globe but now days people are trying anything. Geesh!

  6. So we’re supposed to believe that homeless people have good enough credit to qualify for cell phone contracts? Um…

    • I was just thinking the same thing! Don’t you have to have a credit card?! Hard to believe you could get a homeless guy to do this… Homeless guy with a bank account?

      • You so understand that homeless people are human beings, right? People just like you and me. At one point in their lives people with jobs, cars, homes and credit. These people don’t close their bank accounts and their credit cards just because they’ve lost their homes. Someone could end up without ruined credit and homeless, even if on their way down they severely damaged their credit – it could still be good enough to get an iPhone.

    • rafterman11 says:

      I believe that part of the allegations are that some Apple employees were “in” on it and were ignoring the unqualified credit checks.

      • That is impossible. The carrier would never let it go through. Apple Store employees don’t choose the price to sell the phone at, the carrier eligibility system will tell them. If you had bad credit they even make you pay a deposit directly to the carrier.

  7. scumbolt2014 says:

    Vulnerable. More like dumb.

  8. herb02135go says:

    ” … a mentally disabled man was convinced to sign iPhone contracts.”
    Based on the lengths of waiting, the expense and the lousy Apple customer service I’d say this is the primary demographic.

  9. Well, its all the carriers fault anyway. They should abolish the “2 year contract for 1$ iPhone” or similar and all phones should be automatically unlocked at purchase. Just like here in the EU. Then there’d be no problems and schemes like this couldn’t take place.

    If you don’t have the cash, you could always take a small bank loan and if you can’t because of debt or bad credit, then hey asshole, you don’t NEED an iPhone. Get a cheapo Nokia 3G phone. Stupid people.
    iPhones are for people that have a stable income, good life without drugs and other wasteful nonsense that classifies you as a sub-grade human.

    • Sub-grade human? Racist much?

      Just because someone is without wealth, weak of the mind, or otherwise less than you, doesn’t make them sub-grade… Sub-grade humans who are a waste of time, and resources are those with wealth, sound mind and ability, yet will not reach down into the muck and lift up their fellow man.

      • You are aware, are you not, that to be racist, would refer to a person of a different skin colour than your own? Where in my post did I mention something about black people, hispanics, greeks, asian or anyone other than white?

        Other than that, yes, filthy rich people that don’t put their money to good use to help others, when they have an absurd amount of it, such as royal families in middle eastern countries, why even Steve Jobs when he was alive, is sad to see, but not compulsory. However Bill Gates and Mark Zuckerberg (and others) are at least doing something.
        However, these are not the people I’m speaking about buying iPhones on credit.

    • The moment you created a classification of human (sub-grade human.) you created a group equal to a race, religion ect… By demeaning or insulting these people, you chose to become a negative, a blight on this community.

  10. This is one of the primary reasons for getting rid of subsidised contracts, without them, this can’t happen…. It is a form of credit that is not needed, if you want credit get a loan, don’t play the service providers game…

  11. Is this part of the Obamaphone program?

  12. rafterman11 says:

    Actually, its the Reagan phone program. He started back in the 1980s. Obama changed it from landlines to cell phones to save money on the program.

    Although, odd, but I don’t see Obama’s name anywhere in this article. Strange that you should mention him for no reason.

  13. Just because you’re poor and the homeless doesn’t mean you’re stupid. I think most of these credit mules know what they are getting into. if they are already poor chances are their credit is already bad so they figure they might as well make the 2-$300 bucks. I’m sure most of them were shocked to get approved and took the quick and easy cash.

    I see stuff like this posted on craigslist all the time. there are people who will sign up for a contract to sell the phone to a third party and make a profit.

    The main problem I see is that these homeless people are taking way too little money. Just $300 bucks for me to sign up for several iphones? that’s the real scam…it should be $300 bucks per phone.

  14. Mark Ke says:

    what an insult! so I guess the people that work at Apple are supposed to tell the customer, Im sorry you look homeless I can’t sell you these phones… ya Im sure Apple would love that when some millionaire who dresses like a bum gets told this and then sues the crap outta them… All the Apple employee does is process the transaction and the credit check is run through the carrier and relayed back with an approval or not. It falls on the carrier to make the decision not the employee and there is no way to bypass that check. so to blame the employee is just typical of irresponsible reporting on the part of this author.

  15. This is so stupid and misleading to insinuate that Apple employees are “in on it”, Apple Employees are taught to believe the best in people and shouldn’t be assuming that this person is malicious. But of course the media has to deviate it and put the blame on apple.

  16. Mark Granger says:

    Apple’s iCloud lock for lost iPhones has been working really well. I wonder if we will see that being expanded to allow carriers to lock iPhones?

  17. Mark Granger says:

    This is the worst Apple story I have seen since all the Foxcon controversy. Any employees at the Apple store that knew about this but did not stop it and the store manager must be fired immediately. The store should be shut down for a full investigation. Apple must put out a statement from the top of the company. This story will snowball very quickly and Apple needs to get in front of it. When customers find out that this kind of scam to take advantage of the poor and homeless is going on inside an Apple Store and when informed they escorted out the reporter but not the scam artists, they will likely find somewhere else to shop.

    • You are not understanding the situation at all. This has nothing to do with Apple. Apple employees can not discriminate against a customer looking to purchase a phone if they meet all the requirements of the carrier. The carrier allows this person to purchase the phone, the Apple store employee is a middle man in the transaction. To use an expression “his hands are tied” and he cant do anything to approve or deny the person getting the phone.

  18. I own several at&t stores as an authorized retailer. This has been a problem sometimes but then I trained my employees to make sure that customer has a credit card (not debit card) and verify employment. You can’t go by looks. I have customers who are doctors look like homeless and homeless look like well to do. There are several tell tale signs of a fraudster. Unfortunately, carriers approve customers with no deposit even if they have c class credit. And when that happens many come in for a dollar iPhone 4S. As a dealer we require a valid credit card to make sure they have been approved by a bank. Also most customers would port numbers and that is convincing that they’ll keep it and not cancel. If a 30 year old comes and says he wants a new number and never had a cellphone….that raises question. We invest full price on these phones and can have our agreement on top of carrier’s but that slows down the process.

    Sometimes employee overlook to make sales and it results in cancelations and chargeback.

  19. In the end Apple is always responsible for others act as well.

  20. Its not Apple’s fault. Fault lays on the carrier. I used to work for a store and would hate to see the “resellers” come in. You can blame Apple, because they are buying the phones from the carrier ie, Sprint Verizon or Att&t. They buy them for the discounted price which is given from the carrier.
    “Resellers” NEVER buy a phone for full retail. Shame on carrier not Apple.

  21. Dave Huntley says:

    Charge and deport the guy running the scam.

  22. The amount of people commenting with very bad information in this thread is shocking. Apple employees have absolutely nothing to do with this “scam”. The Apple store employee most likely knows 100% what is happening, but as I can tell you first hand, there is nothing you can do to stop it. It is not illegal to purchase a phone, and they can not discriminate against customers based on appearance. When the employee rings up the phone, it taps into the cell providers system, then you fill out information, and wait for the carrier to make their decision. Its wrong, but these carries accept most people good or bad credit. At this point, Apple employees can not “force” “push” “override” anything to make the system accept the applicant.

    This whole situation is 50% carriers and 50% US law. We need to find a way to prevent this lawfully, maybe by requiring two forms of identification to activate a phone (utility bill,valid drivers license). Sure, this might be an issue for the average person who walks in off the street, but its a big step towards solving this issue.

    • 好运设计_steve sez: ” Sure, this issue might be an issue for the average person with an issue who walks in off the street with an issue , but its a big step towards solving this issue.”

      Erm…hokay, chief.

    • 好运设计_steve sez: ;”Apple employees have absolutely nothing to do with this “scam”. ‘

      Erm… sure, boss. And AppleStore employee SnoopDawg I’m sure is one of the Genii from the Genius Bar just strolling around talking to Paki Benji and exchanging $100 bills with hobos.

      You stupid putz.